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BTS: Bakun Dam to Revive Damn Crony?
By Eddie Toh

25/1/2001 1:33 am Thu

[Daim menafikan projek Bakun akan dihidupkan kembali. Tetapi sudah banyak berita yang tersiar di luar negeri. Jika ia dibangunkan kos akan mencecah RM20 billion. Ramai pakar menganggap projek itu tidak menguntungkan. Setakat ini ia sebenarnya memberikan peluang kepada Ting Ekran untuk membotakkan hutan seluas Singapura untuk mendapatkan balak yang berharga lagi lumayan dalam diam-diam. Takkan kerajaan tidak tahu, Ekran bukannya tahu membuat empangan - dia cuma mah balak untuk industri kayu kayan sahaja. Kita tertanya-tanya apakah ABB begitu kecewa dengan Ekran kerana asyik menghilang dalam hutan. Sampai bila pun projek tidak akan dapat dilaksanakan. - Editor (termenung menanti sesuatu dibawa arus sungai di sebuah kampung permai)]

Source: The Business Times, Singapore
22nd January 2001

Opponents urge M'sia to water down mega Bakun dam

They say full-scale dam is unaffordable and unnecessary; cost may hit RM20b

WITH the economy bouncing back strongly from recession, Prime Minister Mahathir Mohamad's government is about to revive Malaysia's most controversial mega-project.

But it has kept everyone guessing on whether it will resurrect the full-scale version of the Bakun hydroelectric dam, at an estimated cost of RM15 billion (S$6.8 billion), or build a smaller version.

Finance Minister Daim Zainuddin said last week the Economic Planning Unit was still studying the issue.

He denied a report it had already called for bids to revive the full-size version in Sarawak state on Borneo island.

[Mr Daim: denies that govt has already called for bids to revive the full-size version]

Environmentalists and some analysts say the original 2,400 megawatt scheme -- involving flooding an area the size of Singapore and laying the world's longest undersea power cables -- is unaffordable and unnecessary. "It is a megalomaniac's dream. It will be the most unjustifiable dam in the world," said veteran anti-dam campaigner Kua Kia Soong.

With the ringgit pegged at 3.80 to the US dollar compared to 2.50 before Asia's economic crisis, opponents say the cost could soar to about RM20 billion.

The dam has been deeply controversial since it was mooted in the early 1980s to tap the hydropower resources of the Rejang River.

After suspending the project during the 1985 recession, the government gave the go-ahead in 1993 to developer Ekran Bhd.

Ekran's plan involved clearing 69,000 hectares of forest, displacing some 10,000 tribal residents and laying cables stretching 670 kilometres to supply power to peninsular Malaysia.

The High Court in June 1996 declared the project illegal for contravening environmental laws following a suit by a group of natives, but the ruling was quashed by the Appeal Court.

In late 1997 Ekran terminated a contract with a consortium led by Swiss-based Asea Brown Boveri after problems emerged.

By then the economic crisis was already biting and the mammoth project was again deferred. In November 1997 the finance ministry took it over from Ekran which received nearly RM1 billion in compensation.

National power firm Tenaga Nasional was made project manager. It later recommended a smaller dam producing 500 megawatts to cater just to Borneo island at a cost of around RM5 billion.

Much preparatory work is already done, including the relocation of the tribal people.

Korea's Dong Ah Construction Industrial is due by April to complete tunnels to divert river water behind a proposed 205-metre-high dam.

The Malaysian Business Times last week said the government may go ahead with its original plan and was likely to fund the project via bond markets.

In an editorial, it said the project could lead to spin-offs especially in technology transfer for the manufacture of the cables and future power exports.

But Chan Eu Ky, analyst with Dresdner Kleinwort Benson Research, said it did not make economic sense to build such a large dam.

Hydroelectricity may be cheaper but the start-up capital was much more expensive, he said. High transmission loss would occur in transferring power to the peninsula.

"We don't need it. A 500-megawatt dam is justifiable to supply to east Malaysia and even Brunei but at full scale Bakun will be a luxury -- not a necessity," he told AFP.

Pankaj Kumar, senior analyst with OSK Research, said Bakun could help meet long-term power needs but it was more feasible to begin with a 500-megawatt dam that could be upgraded later.

National power demand stood at around 10,000 megawatts last year and is growing by 10 per cent annually, he said. Gurmit Singh, adviser to the Environment Protection Society of Malaysia, said it would be "very foolish and quite irresponsible" to push ahead with the original proposal.

A smaller scheme would flood a smaller area, minimising environmental and social problems. -- AFP

Source: The Business Times, Singapore

22nd January 2001

Back to business as usual in Malaysia?

It must extricate itself from the old patronage system

By Eddie Toh

HAS the Malaysian economy returned to its pre-crisis level? If you listen to the bulls, even a slowdown of the US economy this year will not cripple Malaysia, which is projected to grow by under 6 per cent from the earlier official forecast of 7.5 per cent.

They say manufacturers are still expected to turn in profit growth despite the cutback in orders from the United States. And the humble palm oil, which rescued Malaysia during the severe recession in 1998, may see an uptrend in prices after having fallen to under RM800 (S$366) per tonne from over RM2,300 per tonne in 1998.

To be sure, exports of palm oil and semiconductors will help Malaysia achieve a trade surplus again this year, despite the more subdued global environment. Other economic indicators in Malaysia are healthy as well. Inflation will remain subdued, while the central bank will continue to keep a lid on interest rates. Furthermore, Bank Negara has kept the currency peg intact after 24 months -- six months longer than what some market observers had expected.

But the overall economic recovery in the last two years has also revived some of the old ways of doing business in Malaysia. The government seems to have turned back on its word that there will be no bail-outs. One example is the government's decision to buy back a block of shares in Malaysia Airlines from Naluri Bhd, the vehicle of Tajudin Ramli. The government will buy the 29.09 per cent stake from Naluri at RM8 apiece -- Mr Tajudin's cost in 1994, but more than double the current market price. Furthermore, the price tag is almost twice the net tangible assets of the money-losing carrier.

The government is free to re-nationalise privatised assets but it should not be seen as helping major owners at the expense of minority shareholders.

In the case of MAS, only Mr Tajudin will be able to head for the exit at RM8 per share as the government is seeking a waiver from making a mandatory general offer although parties acting in concert now control close to 50 per cent of MAS. This is way above the trigger level of 33 per cent.

The government will argue the waiver is necessary in the name of national interest as it needs to control the national asset first, before restructuring it and selling part of its stake to a foreign partner. But why should it take care of the major shareholder's interest first? The government could pump funds directly into the airline, whittle down Mr Tajudin's stake and remove him. Or he should have been allowed to sell his stake to a party endorsed by the government. After all, the Finance Minister owns a golden share that has wide-ranging powers.

Another reminder of past excesses is the revival of projects that were deemed not viable during the crisis. The government will resurrect the original Bakun dam project in the eastern Sarawak state despite an earlier promise to scale it down. The cost may touch a staggering RM20 billion from the earlier estimate of RM15 billion. Will the parties involved have an open and competitive tender exercise? Or will the sub-contractors be appointed again? And will the parties involved make the Environmental Impact Assessment easily accessible to the public? Or will a copy of the report be placed at the site in the remote jungles again? There will surely be intense scrutiny of the biggest infrastructure project in the country when it takes off.

On the political front, the establishment has not made much headway in wooing back disgruntled voters who have switched to the opposition. Last November, the dominant political party United Malays National Organisation (Umno) could not push through major changes due to strong resistance from division heads. Money politics will continue to plague the party despite Prime Minister Mahathir Mohamad's attempts to remove the disease.

Despite the economic recovery, Malaysia cannot afford to veer back to the old way of doing business. Both investors and voters have become more demanding in the wake of major changes in the economic and political landscape over the last two years. Malaysia must extricate itself from the old patronage system if it is to regain the confidence of investors as well as voters.